Campus budget update

April 17, 2020

Dear Colleagues, 

We wrote to you earlier this month to describe our campus budget picture and the principles we are using to make decisions. Today, we share an update, as well as additional information that we are using to further understand and shape the campus budget for the remainder of this fiscal year, for FY 2021, and beyond.

Before we delve into the details, we want to express our deep appreciation for all that you are doing to preserve our education and research missions, and fulfill our public service mission. We are heartened by the ways so many of you have stepped up to deliver education in a radically different fashion than you are used to; pivoted in creative ways to maintain your research projects, some even venturing into new avenues of research around COVID-19; supported our students in innumerable ways; and served the campus by participating in the new Berkeley Conversations series, holding your own webinars, responding to media inquiries, and providing your expertise to our elected officials. 

Campus Priorities and Decision-making Principles

As we wrote in our April 1 message, our goals -- as far as our budget and community are concerned -- are to preserve jobs, and position the campus favorably for the future. Our decisions will continue to be based on public health guidance and our interest in protecting the health and safety of our campus community.

As we move into the budget process, we will prioritize protecting the academic core while also providing resources to departments entrusted with health and life safety. In addition, it has become clear we will need to continue to invest in remote learning, and provide the necessary resources for employees to be able to effectively work remotely.

Uncertainty has become a key feature both in our personal and professional lives and for now, at least, it is a cloud that hangs over our budget process as well. The best way to address this uncertainty in the budget realm is to engage in planning for multiple scenarios, imagining and projecting against a number of possible short- and long-term realities. And it also means that we will be proactive in budget planning and ask for your collaboration, ingenuity and patience as we go through the process. 

COVID-19 Budget Impacts and FY 2021 Projection

The impact of COVID-19 on the campus budget is now projected to be in the range of $200 million, representing a combination of revenue losses and expenses, which we described in our April 1 message. Underpinning this projection are a number of factors in flux: We do not yet have a clear picture of what fall enrollment will look like, nor do we know what level of state funding we can expect. Insofar as state funding is concerned, given the state’s delayed tax return deadline of July 15, the state’s budget will not be finalized until August, and thus, we will not know what our funding levels will be until that time.

For this reason, we are adjusting the campus budget schedule and process. We will ask departments and divisions to prepare two separate budgets based on two different scenarios, and then once we have a sense of our fall enrollment and state funding, we will ask you to formally submit one of the two. We believe this process will allow us to be nimble once the external forces are known and also help to set expectations within departments and divisions and across campus around the possibilities we are facing.

Mitigation Strategies

There are a number of strategies by which we can mitigate to some extent the impact on our budget from COVID-19. Congress has passed one piece of legislation (known as the CARES Act), which promises to bring $30 million to the Berkeley campus, $15 million of which will go directly to emergency financial assistance for students. Other federal stimulus packages are being considered which may provide funding for COVID-19 research, capital and infrastructure projects. In addition, the campus is actively investigating whether we are eligible for funding from the Federal Emergency Management Agency (FEMA) as part of our response to the COVID-19 crisis. 

Another approach that we will take is to carefully reconsider future capital projects in light of the current uncertainties. 

There are strategies being considered at the systemwide level that would provide budget relief, such as a delay in merit increases and salary cuts for senior leadership; authority for those decisions rests in the UC Office of the President and will not be made soon.

Given the importance of fall enrollment to our budget picture, the campus is executing an aggressive approach to admissions, including a week of yield activities kicking off tomorrow with the start of a virtual Cal Week (in place of Cal Day, the well-known campus-wide welcome to our admitted students and community festival).

Having just recently emerged from several years of a budget deficit, we already find ourselves on a frail base, with increased reliance on revenue-generating strategies and philanthropy.  After mitigation efforts, FY 2021’s deficit is projected to be in the range of $130-160 million.

The Way Forward

UC Berkeley’s history has been characterized by a remarkable resilience. It is our fervent hope that this will be the case as we emerge from this current crisis. Please let us continue to work together, to support each other and the most vulnerable among us, and take decisive steps to preserve our mission, which is more important now than ever.

Please take good care of yourselves and those close to you. We will be in touch soon. Please monitor the campus COVID-19 site for continuing updates.

 
Sincerely,
 
Carol Christ
Chancellor
 
A. Paul Alivisatos
Executive Vice Chancellor and Provost
Chancellor's Office